Glassell v. Prentiss
| Decision Date | 25 November 1959 |
| Citation | 346 P.2d 895,175 Cal.App.2d 599 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Raymond A. GLASSELL, Plaintiff and Appellant, v. Raymond A. PRENTISS et al., Defendants and Respondents. Civ. 5929. |
Wendell V. Harris, Fontana, for appellant.
Surr & Hellyer, San Bernardino, for respondents.
Action for partnership accounting and dissolution, damages for breach of contract, fraud and non-payment of wages. Judgment for defendants affirmed.
This action arose out of an oral agreement entered into in November, 1954, between the plaintiff Glassell, as one party, the defendant Glen Ashurst, as a second party, and the defendant partnership, Chartier, Laufer and Prentiss, which was engaged in the painting business, as a third party. The pre-trial conference order recites that the parties agree that they entered into an oral contract to form a business for installing walls in houses under construction; that the plaintiff would be field superintendent of the business at a salary of $200 per week; that the defendant Prentiss would be office manager at a salary of $25 per week; that the defendant Ashurst would do the estimating at $25 per week; and that all profits would be divided equally between the parties. Each party contributed $3,000 to the business. It appears from the undisputed evidence that the parties intended to form a corporation known as the 'Consolidated Dry Wall Corporation.' Forthwith, they undertook to form a corporation under that name; articles of incorporation were executed and filed, but no organizational meeting was conducted; no officers were elected; and no shares of stock were issued. Also forthwith, business operations commenced under the corporate name; contracts for the installation of dry walls in houses were entered into and performance thereof was commenced. The plaintiff acted as manager and was paid $200 a week. After the business had been in operation approximately two months, the defendants discovered that the cost of performance was exceeding the contract price payable to them by approximately $125 per house. Thereupon, the defendants caused further incorporation proceedings to be deferred. On March 25, 1955, culminating a series of discussions between the parties which commenced in January, 1955, concerning the inability of the business to make money, attempting to get the plaintiff to accept a smaller salary, and involving negotiations for the sale of the defendants' interest to the plaintiff, the defendants served a notice on the plaintiff that his services as field superintendent were terminated as of that date. The defendants proceeded to complete the work on contracts which had been commenced and which the business was obligated to finish; and assigned to other dry wall firms contracts upon which work had not been started. After all of the work in progress had been completed, and all other contractual obligations satisfied by assignment, the only remaining asset was a Willys Jeep pick-up truck, and the only outstanding liability was an indebtedness of $2,278 to the defendant paint partnership for advancements to complete the unfinished contracts, and to pay off the balance on the Willys Jeep. No further contracts were negotiated and the business came to an end. After March 25, 1955, the plaintiff made no request to participate in the business; to assist in its winding up; or to examine its books and records.
The plaintiff brought this action to recover his share of the partnership assets as of March 25, 1955, as well as damages for breach of the alleged contract of employment and resultant loss of wages at the rate of $200 per week.
In his amended complaint 'for partnership accounting and dissolution, damages for breach of contract, fraud, and non-payment of wages,' the plaintiff alleged the existence of the foregoing oral agreement; his compliance therewith and breach by the defendants; that the business formed pursuant to the agreement was a partnership with assets worth $90,000 on March 25, 1955, in which he had a one-third interest; that he was discharged wrongfully; and that the defendant paint partnership fraudulently conducted the business with intent to fraudulently deprive him of his property.
The trial court, in substance, found the existence of the oral agreement; that the relationship created by it had been dissolved by the notice of March 25, 1955; that the defendants in good faith determined that because of loss of money the business should be liquidated any thereupon completed the contracts entered into by it for the installation of dry walls which were in the course of completion, and assigned other contracts which were not yet started; that 'Certain accounts receivable were assigned as payment of accounts payable and all assets of the business were disposed of except the Willy Jeep'; that the 'Liabilities of the business exceeded the essets in liquidation', and the defendant paint partnership advanced $2,278 in payment of obligations of the business; that the defendants at all times acted in good faith and there was no fraud; that the plaintiff was employed for an unspecified term; that his employment could be terminated at will, and was terminated on March 25, 1955. The court concluded that the plaintiff was the owner of a one-third interest in the Willys Jeep pick-up truck subject to his payment to the defendant paint partnership of one-third of the amount advanced by that partnership, and that he should recover nothing for wages or as damages. Judgment was entered accordingly and the plaintiff appeals.
In its findings the trial court stated that 'Since the rights of third parties are not involved, the Court makes no finding as to whether or not the oral contract entered into in November 1954 constituted a partnership agreement, and further makes no finding as to whether or not a partnership was thereby formed under the firm name * * * of Consolidated Dry Wall Corporation.'
With respect to the assets of the business on March 25, 1955, the day on which the plaintiff's alleged employment was terminated and after which he took no part in the business operation, the court found that, The court also found as true an allegation in the defendants' answer that 'on March 25, 1955 Consolidated Dry Wall Corporation was an insolvent business and had no net worth.'
The plaintiff contends that, (1) the business was a partnership and the court erred in not so finding; (2) the partnership was not lawfully dissolved; (3) he was expelled from the partnership on March 25, 1955 and was entitled to the value of his interest as of that date; (4) his employment as field superintendent was coupled with an interest; was not subject to termination at the will of the parties; and that his discharge was wrongful; (5) that he was entitled to damages for breach of this contract of employment even though the amount thereof may have been difficult to determine; and (6) that the findings and conclusions of the trial court in conflict with these contentions were contrary to the law and the evidence.
The trial court, in a memorandum opinion, noted that the contentions with respect to whether the parties were operating as joint venturers, partners, a corporation de facto or a corporation de jure were largely academic, because no third party was involved. Accordingly no finding on the issue raised by the partnership allegations in the complaint was made.
Whether the parties, 'as among themselves, be termed partners, joint venturers, or co-promoters of a corporation * * * it is obvious that the trial court was justified in concluding that they stood on an equal footing an entrepreneurs.' Holmberg v. Marsden, 39 Cal.2d 592, 597, 248 P.2d 417, 419. The obligation imposed upon the parties as associates in the business venture in question was fiduciary in character, and one in good faith with respect to the subject-matter of their agreement. Bellus v. Peters, 165 Cal. 112, 130 P. 1186: Pacific Atlantic Wine, Inc., v Duccini, 111 Cal.App.2d 957, 245 P.2d 622; Morris v. Whittier Amusement Co., 123 Cal.App. 121, 10 P.2d 1017. In this respect the obligation imposed upon them was similar to that imposed upon partners, joint venturers or co-promoters of a corporation. The trial court determined that the defendants complied with this obligation in finding that a dispute arose between the parties as to whether the business was operated at a loss; that at all times the business was operated at a loss; that the defendants determined in good faith to liquidate the business because of its losses in the past; that the plaintiff was discharged as field superintendent because the business could not afford the salary payable to him under the agreement; that when the plaintiff ceased to act as field superintendent the defendants carried on the business to the best of their ability and discharged the obligations imposed upon it by previously executed contracts to install dry walls; and that in all ways the defendants acted in good faith, without fraud, and made no profit from the transaction. The parties had entered upon an undertaking which all of them hoped would be profitable but which had not met their hopes. There was substantial evidence to support these findings. In this regard it must be remembered that, in reviewing the sufficiency of evidence to sustain findings of fact an appellate...
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